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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 26, 2006
PORTALPLAYER, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-51004 | 77-0513807 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
|
70 W. Plumeria Drive San Jose, California |
95134 | |
| (Address of principal executive offices) | (Zip Code) |
(408) 521-7000
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The information in this Current Report is being furnished and shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated
by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On January 26, 2006, PortalPlayer, Inc. (the “Company”) issued a press release regarding the Company’s financial results for its
fourth quarter and year ended December 31, 2005. The full text of the Company’s press release is furnished herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
|
Exhibit No.
|
Description |
|
| 99.1 | Press release dated January 26, 2006. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 26, 2006
| PORTALPLAYER, INC. | ||
| By: |
/s/ Svend-Olav Carlsen |
|
| Svend-Olav Carlsen | ||
| Vice President and Chief Financial Officer | ||
EXHIBIT INDEX
|
Exhibit No.
|
Description |
|
| 99.1 | Press release dated January 26, 2006. |
Exhibit 99.1
| Contacts: | ||
| S. Olav Carlsen | Kristine Mozes | |
| PortalPlayer, Inc. | Mozes Communications LLC | |
| (408) 521-7000 | (781) 652-8875 |
PortalPlayer, Inc. Reports Record Revenue and Record Net Income in Q4 2005
Revenue Increases From $93 Million in FY04 to Record $225 Million in FY05
SAN JOSE, Calif. – January 26, 2006 – PortalPlayer, Inc. (NASDAQ: PLAY), a leading supplier of semiconductor, firmware and software solutions for personal media players and secondary display-enabled notebook computers, today announced financial results for the fourth quarter and fiscal year ended December 31, 2005.
Net revenue for the fourth quarter of 2005 was $78.2 million, up 35 percent from $57.9 million in the third quarter of 2005 and up 75 percent from the $44.7 million in the fourth quarter of 2004. GAAP net income for the fourth quarter of 2005 was $23.8 million, or $0.92 per diluted share, based on 25.8 million weighted average shares outstanding. This included $664,000 of stock-based compensation charges and also a benefit of $8.6 million related to the release of a portion of the valuation allowance against deferred tax assets. Excluding both of these effects, non-GAAP net income was $15.9 million, or $0.62 per diluted share.
GAAP net income in the third quarter of 2005 was $10.3 million, or $0.40 per diluted share, based on 25.5 million weighted average shares outstanding. GAAP net income in the fourth quarter of 2004 was $10.5 million, or $0.50 per diluted share, based on 21.1 million weighted average shares outstanding. On a non-GAAP basis, which excludes stock-based compensation charges, net income for the third quarter was $11.0 million, or $0.43 per diluted share, and non-GAAP net income for the fourth quarter of 2004 was $11.2 million, or $0.53 per diluted share.
Fiscal 2005
Net revenue for fiscal 2005 was $225.2 million, up 143 percent from $92.6 million for fiscal 2004. Net income for fiscal 2005 was $48.2 million, or $1.90 per diluted share, based on 25.4 million weighted average shares outstanding. This compares with a net income of $10.4 million, or $0.57 per share, based on 18.1 million weighted average shares outstanding in fiscal 2004. Non-GAAP net income for fiscal 2005 was $41.8 million, or $1.65 per diluted share, excluding stock-based compensation charges as well as the fourth quarter tax benefit mentioned above. This compares with a non-GAAP net income of $16.2 million, or $0.89 per share in fiscal 2004.
“2005 was an outstanding year for PortalPlayer,” said Gary Johnson, president and chief executive officer of PortalPlayer. “We had record annual revenue growth, increasing from $93 million in 2004 to $225 million in 2005, and we increased profitability substantially year-over-year. The fourth quarter was another record revenue quarter for us, with impressive shipment activity throughout the entire quarter, including the last three weeks, which we recognize as deferred revenue. In addition, we made significant strides in advancing our technology. During the year, we introduced innovative new technologies such as our PP5022 family, which tripled battery life for media players, and the PP5024, our first fully integrated system-in-package. As a result of these devices, we extended our leadership position in the personal media player market to now also include feature-rich flash-based players, in addition to hard drive-based players, and successfully launched our new PortalPlayer Preface technology for a major new market – personal media displays.
“We expect 2006 to be another year of significant growth for the feature-rich segment of the personal media player market. In addition, we expect our new PortalPlayer Preface technology to help us diversify our customer and revenue base in 2006 and beyond,” said Mr. Johnson.
Highlights
| • | At the Consumer Electronics Show in January, PortalPlayer introduced the Preface™ technology platform, its new core technology to address a major new market segment, personal media displays. Microsoft and PortalPlayer worked together to integrate the Preface technology with a flexible new feature set in Microsoft Windows Vista called Windows SideShow to enable notebook users to have instant access to data, music, and photos without opening the unit, booting the system and loading the needed application. With the Preface technology’s ultra low power processing subsystem, users can access their data for hours even after the battery runs too low for the notebook to operate. The company has cooperated with Atrua, Authentec and Synaptics to enable advanced user interfaces in personal media displays. |
| • | Continuing PortalPlayer’s success with its FeatureFlash™ platform, SanDisk recently announced the Sansa e200 Series of personal media players that use PortalPlayer’s 5024 device. |
| • | PortalPlayer’s PP5022 device was chosen by Philips for its hard drive-based GoGear 6330 and 1630 media players. |
| • | The company announced that it had licensed Sun Microsystems’ Java™ Platform, Micro Edition (Java ME) technologies to be included in PortalPlayer’s personal media player platforms that are expected to be released in the first half of 2006. This enables PortalPlayer customers to add Java applications such as games and productivity tools to next-generation personal media players. |
| • | The Sirius S50, which uses PortalPlayer’s technology, is a CES Innovations 2006 Awards Honoree in the portable audio category. |
| • | PortalPlayer named Tomas Isaksson, Robert Gunst and Professor William Dally to its board of directors. Mr. Isaksson is a veteran of the wireless industry. Mr. Gunst has extensive experience in the consumer electronics retailing industry. Prof. Dally is the Chairman of the Department of Computer Science at Stanford University. |
Current Financial Outlook for First Quarter 2006
The following outlook statements are based upon current expectations. These statements are forward-looking, and actual results could differ materially.
The company expects revenue to be in the range of $70 million to $80 million. Operating expenses are expected to be approximately $18.2 million. The effective tax rate for the first quarter is expected to be about 35 percent. GAAP net income per diluted share for the first quarter is expected to be in the range of $0.28 to $0.38, based on approximately 26.5 million weighted average shares outstanding. Stock-based compensation charges, in accordance to SFAS 123R, are expected to be about $1.8 million net of tax. Non-GAAP net income, excluding these stock-based compensation charges, is expected to be in the range of $0.35 to $0.45.
Conference Call
The company will hold a conference call at 2:30 pm Pacific Time today, January 26, 2006, to discuss the fourth quarter and 2005 year end financial results. To participate, please dial (913) 981-5533 at approximately 2:20 pm PT. A live webcast of the conference call will be available via the investor relations page of the company’s website at www.portalplayer.com . Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. A recording of the conference call will be available for one week, starting one hour after the completion of the call, until February 2, 2006. The phone number to access the recording is (719) 457-0820, and the passcode is 8165640. An archived webcast replay will be available on the web site for 12 months.
Non-GAAP Financial Measures
This press release includes financial measures for earnings per share and net income for our results for the fourth quarter and fiscal year of 2005 that have not been calculated in accordance with generally accepted accounting principles (GAAP). These differ from GAAP in that they exclude stock-based compensation charges as well as the fourth quarter tax benefit mentioned above. PortalPlayer believes that providing these non-GAAP financial measurements is useful to its investors because they provide a consistent basis for comparison of the company’s financial condition and results of operations between quarters, which comparison is not influenced by stock-based charges and one time tax benefits. The presentation of this additional information is not meant to be considered in isolation or as a substitute for earnings per share or net income calculated in accordance with GAAP. A reconciliation of these GAAP and non-GAAP financial measures is included in the attached tables.
About PortalPlayer
PortalPlayer develops semiconductor, firmware and software platforms for portable multimedia products such as personal media players and secondary display enabled notebook computers. PortalPlayer products empower consumers to quickly and easily manage, enjoy and have access to multimedia content and other forms of information. PortalPlayer is headquartered in San Jose, Calif., with offices in Kirkland, Wash., Taipei, Taiwan and Hyderabad, India. For more information, visit www.portalplayer.com.
Safe Harbor Statement
Except for the historical information contained herein, the statements in this press release are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements as to the expected growth of the feature-rich segment of the personal media player market, the benefits of our new PortalPlayer Preface technology, the diversity of our future customer and revenue base, launch and availability of Windows Vista and Windows SideShow, the availability of notebook computers with our Preface technology platform, benefits of integrating our Preface technology platform functionality in notebook computers, the launch of future company products incorporating the Java technology and the broadening our product offering, and expected growth and diversification in 2006, expectations regarding future financial results, including revenue, net income, operating expenses, tax rates, weighted average shares outstanding, and stock-based compensation expense, and the benefits of providing non-GAAP financial measures. Words such as “intends,” “expect,” “believe,” “anticipates,” “going forward”, “plans,” “will”, “prepare,” “increases,” “could” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed in these statements. These risks and uncertainties include, but are not limited to, the growth of the market for personal media players, cancellation or reduction of orders, component shortages, successful development of new platforms and other products, market acceptance of our products and technologies, delays in product introductions, product defects, decreases in average selling prices, impact of technological advances, our ability to compete and other risks detailed in our SEC filings, including our Form 10-Q for the quarter ended September 30, 2005. These forward-looking statements speak only as of the date hereof. PortalPlayer disclaims any intent or obligation to update these forward-looking statements.
PortalPlayer and the PortalPlayer logo are trademarks of PortalPlayer, Inc. All other trademarks or registered trademarks are the property of their respective owners.
###
PORTALPLAYER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Revenue
Cost of revenue
Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Stock-based compensation
Total operating expenses
Operating income
Interest and other income, net
Income before income taxes
Provision (benefit) for income taxes
Net income
Basic net income per share
Diluted net income per share
Shares used in computing basic and non-GAAP basic net income per share
Shares used in computing diluted and non-GAAP diluted net income per share
Non-GAAP net income (1)
Non-GAAP basic net income per share (1)
Non-GAAP diluted net income per share (1)
Reconciliation of GAAP Net Income to
Non-GAAP Net Income
GAAP net income
Stock-based compensation
Net benefit from release of tax valuation allowance
Non-GAAP net income
PORTALPLAYER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventory, net
Deferred tax assets
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Deferred tax assets
Other assets
Total assets
Liabilities:
Current liabilities:
Accounts payable
Accrued liabilities
Deferred income
Deferred rent
Income taxes payable
Total current liabilities
Deferred rent, long-term
Total liabilities
Stockholders’ equity:
Common stock
Deferred stock-based compensation
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2005
2004
2005
2004
$
78,248
$
44,724
$
225,189
$
92,563
42,064
25,307
124,343
53,743
36,184
19,417
100,846
38,820
12,746
5,327
36,234
14,823
6,006
2,795
16,413
7,605
664
735
2,217
5,797
19,416
8,857
54,864
28,225
16,768
10,560
45,982
10,595
1,633
263
4,975
269
18,401
10,823
50,957
10,864
(5,409
)
309
2,730
481
$
23,810
$
10,514
$
48,227
$
10,383
$
1.00
$
0.85
$
2.06
$
2.46
$
0.92
$
0.50
$
1.90
$
0.57
23,801
12,382
23,424
4,224
25,755
21,105
25,358
18,128
$
15,872
$
11,249
$
41,842
$
16,180
$
0.67
$
0.91
$
1.79
$
3.83
$
0.62
$
0.53
$
1.65
$
0.89
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2005
2004
2005
2004
$
23,810
$
10,514
$
48,227
$
10,383
664
735
2,217
5,797
(8,602
)
—
(8,602
)
—
$
15,872
$
11,249
$
41,842
$
16,180
(1)
To supplement our consolidated financial statements presented in accordance with GAAP, we have shown above a non-GAAP measure of net income, which is adjusted from results based on
GAAP to exclude stock-based compensation and net benefit from the release of the tax valuation allowance. This non-GAAP measure is provided to enhance the user’s overall understanding of our historical financial performance. Specifically, we
believe the non-GAAP results provide useful information to both management and investors by excluding stock-based compensation expenses and net benefit from the release of the tax valuation allowance.
December 31,
2005
December 31,
2004
ASSETS
$
48,074
$
58,892
131,435
64,708
46,678
20,080
7,212
1,762
3,577
—
4,862
1,872
241,838
147,314
3,766
661
5,025
—
1,497
521
$
252,126
$
148,496
LIABILITIES AND STOCKHOLDERS’ EQUITY
$
29,352
$
1,290
12,083
4,195
10,850
4,024
5
55
2,047
479
54,337
10,043
331
5
54,668
10,048
219,446
205,468
(7,767
)
(4,799
)
(264
)
(37
)
(13,957
)
(62,184
)
197,458
138,448
$
252,126
$
148,496
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